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Leafs, NBA, GOL TV, hidden key to MLSE value, Richard Peddie says

Former MLSE boss discusses cable sports broadcast rights bubble in “Dream Job” a memoir on his life in the sports industry

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Business Reporter Morgan Campbell sits down with Richard Peddie, former President and CEo of Maple Leaf Sports and Entertainment to discuss his new book Dream Job: My Wild Ride On The Corporate Side With The Leafs, The Raptors and TFC.(Anne-Marie Jackson/ Toronto Star)

A few months after the September 2001 launch of Raptors NBA TV, the NBA commissioner sent a note to Richard Peddie, then the president and CEO of Maple Leaf Sports entertainment, and the executive who first conceived of building TV networks around the Leafs and Raptors.

“You’re ahead of the curve,” the noted read. “Now stay there.”

Peddie can’t calculate the exact return on MLSE’s $7 million investment in its first two networks, but he says without them and GOL TV, which the corporation purchased later, MLSE wouldn’t have been worth close to the $1.32 billion Rogers and Bell paid to acquire majority control in December 2011.

And in his memoir, Dream Job, which hit stores Tuesday, Peddie discusses MLSE’s aborted plans to establish its own sports network, and how the rising tide of rights’ fees boosted MLSE’s value anyway.

“If we had launched Real Sports TV, in four to five years it would have been worth $1 billion,” Peddie says. “Rogers and Bell bought (MLSE) because they wanted the content themselves. They were worried about losing it, but they made sure they got the Raptors and Toronto FC and the Leafs. They guaranteed their future.”

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As proof, Peddie cites dizzying dollar amounts leagues and teams across the continent command for rights to broadcast their games.

Richard Peddie attends a press conference to announce Brian Burke as the new President and General Manager of the Toronto Maple Leafs, in Toronto, on Saturday Nov. 29, 2008.
THE CANADIAN PRESS/Chris Young (CHRIS YOUNG / THE CANADIAN PRESS)

The NBA receives $913 million (U.S.) annually from ABC/ESPN and Turner Sports, a figure that rise dramatically next year, when the league and networks are slated to finalize a new broadcast deal.

Meanwhile, he says the contract he negotiated before while at MLSE guarantees the Leafs an average of $700,000 for every game broadcast on a Rogers network, a figure Peddie says rivals the cost of L.A. Lakers rights.

He also points to the premium broadcasters pay to connect with iconic franchises – the Los Angeles Dodgers’ deal with Time Warner Cable led to the creation of a local sports network and will pay the franchise up to $8 billion over 25 years.

Cable companies cover the cost of rights fees by boosting the cost of sports channels included in either basic cable or in popular packages, prompting a group of angry cable customers in the U.S. to fight back.

Philadelphia-based lawyer Ned Diver is organizing a class-action suit against Major League Baseball, the NHL and several U.S.-based regional sports networks, alleging the companies form a cartel that suppresses competition and creates regional monopolies.

If a fan wants to follow a favourite team in another city, Diver argues he or she should have the right to buy broadcasts from that team instead of purchasing costly cable packages.

“Everyone concedes that cable-television costs are shooting through the roof,” Diver told the Philadelphia Inquirer. “And everyone concedes that sports costs are the primary problem.”

Removing specialty sports channels from bundles might mean fewer subscribers per network, but it also eliminates subscribers who never really wanted the channel, allowing networks to charge dedicated customers at a higher rate.

“Consumers haven’t liked mandatory bundling at all,” he says. “But if you were to pay $3.50 (a month) for a channel and you got 12 Leaf games, 12 Raptor games, and some TFC games – that’s some pretty good entertainment.”

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